The Indian government may end up with around Rs 500 to Rs 600 crore from a stake sale of 12% by listing The Indian Railway Catering and Tourism Corporation (IRCTC). The company started by offering catering services to the passengers of Indian Railways is more popular now for its ticket booking platform where some 7.2 million logins occur each day. It is one of the earliest and largest e-commerce platforms in the country.
As per a Business Standard report, the Union government has just filed the draft red herring prospectus (DRHP) to the Securities & Exchanges Board of India (SEBI) for the IPO, subject to the mandatory approvals, the issue may open for subscription soon.
The prospectus tries to convey the message that IRCTC enjoys a virtual monopoly in offering online ticket services and selling drinking water and food catering in the Railways. Some of the other diversified businesses that IRCTC has entered into include e-catering, executive lounges and budget hotels.
As mentioned, the online booking of tickets by rail passengers has grown exponentially and over 70% of the tickets are now being booked online. The growth in this activity has been an impressive 12.5% year on year in the recent years.
An attraction IRCTC offers to passengers booking tickets is travel insurance at a negligible cost of 49 paise on each ticket. The sum insured varies between Rs 0.75 to Rs 1 million.
This IPO was to have opened much earlier, possibly in 2017. The delay till now has been more due to a sudden decision by the government to remove the service charge for online ticketing following demonetization and the stress on going digital. IRCTC lost revenue of around Rs 500 crore in this process. This has since been made good through advertisements etc.
Rail Vikas Nigam (RVNL) is another Railway PSU which went public and made Rs 480 crore by disinvesting 12%. The government might want the IRCTC IPO to just follow the same route.